Correlation Between Farfetch and Imedia Brands

By analyzing existing cross correlation between Farfetch Ltd Cl and Imedia Brands, you can compare the effects of market volatilities on Farfetch and Imedia Brands and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Farfetch with a short position of Imedia Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farfetch and Imedia Brands.

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Can any of the company-specific risk be diversified away by investing in both Farfetch and Imedia Brands at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Farfetch and Imedia Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Farfetch and Imedia Brands

0.36
  Correlation Coefficient
Farfetch Ltd Cl
Imedia Brands

Weak diversification

The 6 months correlation between Farfetch and Imedia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Farfetch Ltd Cl and Imedia Brands in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Imedia Brands and Farfetch is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Farfetch Ltd Cl are associated (or correlated) with Imedia Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imedia Brands has no effect on the direction of Farfetch i.e., Farfetch and Imedia Brands go up and down completely randomly.

Pair Corralation between Farfetch and Imedia Brands

Given the investment horizon of 90 days Farfetch Ltd Cl is expected to under-perform the Imedia Brands. But the stock apears to be less risky and, when comparing its historical volatility, Farfetch Ltd Cl is 1.19 times less risky than Imedia Brands. The stock trades about -0.17 of its potential returns per unit of risk. The Imedia Brands is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  542.00  in Imedia Brands on October 20, 2021 and sell it today you would earn a total of  80.00  from holding Imedia Brands or generate 14.76% return on investment over 90 days.
Time Period6 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Farfetch Ltd Cl  vs.  Imedia Brands

 Performance (%) 
      Timeline 
Farfetch Ltd Cl 
Farfetch Performance
0 of 100
Over the last 90 days Farfetch Ltd Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Farfetch Price Channel

Imedia Brands 
Imedia Performance
0 of 100
Over the last 90 days Imedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Imedia Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Imedia Price Channel

Farfetch and Imedia Brands Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Farfetch and Imedia Brands

The main advantage of trading using opposite Farfetch and Imedia Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farfetch position performs unexpectedly, Imedia Brands can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Imedia Brands will offset losses from the drop in Imedia Brands' long position.
The idea behind Farfetch Ltd Cl and Imedia Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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